September 1, 2014

EPA proposal on ethanol use draws criticism from many in Iowa

Iowa politicians and ethanol industry leaders are condemning a decision announced by the EPA that would cut the amount of corn-based ethanol required to be blended into fuel.

Iowa Renewable Fuels Association (IRFA) executive director, Monte Shaw, says lowering the amount of ethanol required in the Renewable Fuel Standard or RFS, plays into the hands of big oil companies. “It essentially sees the power of dictating each year’s RFS level to the petroleum industry based on what they want to allow into the marketplace,” Shaw says.

The proposed renewable fuel standard calls for about three-billion fewer gallons of ethanol to be blended into gas compared to the legislation passed six years ago. “If this proposal were to be finalized, it would put in place a regulatory framework that creates a circular form of logic from which there is no off ramp,” Shaw says. “In other words it says, we are not selling enough higher blends of renewable fuels today and so we have to lower the RFS number.”

Shaw doesn’t think the change would impact the ethanol plants that are already in the process of being built, as he says their funding is already in place. He says it will impact what happens with any future plants.”It makes it real hard to see how you are gonna raise the investment to build number two of each of those — you know what I mean,” Shaw says.

In a conference call with reporters he was asked if the change will impact the price of corn. “There’s no doubt about it,” Shaw responded. Shaw says the drop in the ethanol requirement, along with price supports going out of the Farm Bill, there’s going to be a big impact on the price of corn. “We are very possibly heading into — for the first time since the 1930s — a time frame where the price of corn that a farmer can get is below their marginal cost. And the difference is no safety net,” Shaw explains.

Shaw says things could go back to what they were like in the 1980s when he grew up. “It was not fun in rural America,” Shaw says. “I am honestly, heartfelt, very concerned that a combination of these two policies from the Obama administration could fuel another farm crisis.” He calls it the biggest reversal of policy in the Obama Administration.

Governor Terry Branstad’s office issued a statement saying he “vowed to join agricultural groups, family farmers and all Iowans in fighting for renewable fuels in light of the misguided and dumfounding decision by the Environmental Protection Agency (EPA) to lower the volumes of renewable fuels utilized on America’s streets and highways.” Members of Iowa’s congressional delegation also issued statements vowing to fight the proposed EPA rule.